As is the case in states across the country, Ocean State law allows most nonprofits to avoid paying the state's 7-percent sales tax. That saves tens of millions of dollars each year on purchases of office supplies, computer equipment and construction materials for organizations legally prohibited from turning a profit.

Lawmakers would rather not eliminate the sales-tax exemption, according to House Finance Committee Chairman Steven M. Costantino, but the condition of the state's finances is forcing them to contemplate a host of unpopular tax changes.

"We have looked at — the Senate and the House have looked at the sales tax issue. And the nonprofit piece of it has been looked at," Costantino said Wednesday afternoon. "At the end of the day, I have to see how much revenue I have. I have to worry about May."

Indeed, state budget officials in May will determine whether budget deficits — set at $220 million for the current-year and $427-million for the budget year that begins July 1 — might actually worsen because of the state's anemic economy.

"Given the circumstances, everything's on the table," Senate Finance Committee Chairman Daniel DaPonte said when asked about the nonprofit tax, noting that it's difficult to document the financial impact of such a move. "We've asked our staff to look at it."

Members of the nonprofit community reacted with a combination of shock and disbelief when notified Wednesday of the possibility.

"My experience is that you have open and thoughtful discussion with the Assembly leaders on a year-round basis, given the size and importance of the hospital industry to the state. We have not had any discussion about this, direct or indirect," said Edward J. Quinlan, president of the Hospital Association of Rhode Island. "I'm not aware of any state in the country that has such a tax."